Industry funds dominate investment returns
The dominance of industry superannuation funds has been driven home in the latest investment performance data with just two retail master trusts being counted in the Top 10 balanced options for last financial year and none with respect to 10-year balance option returns.
Amid the continuing consolidation of superannuation funds, the latest analysis from SuperRatings has named only IOOF Employer Super Core and Mercer Super Trust in the Top 10 balanced option which were led by ESSSuper, Vision Super, Brither Super, Unisuper and Equip Super.
However, equally, significant is the fact that while Australia’s second-largest industry fund, Australian Retirement Trust made it into the Top 10 balanced option for 2022/23, Australia’s largest industry fund, AustralianSuper did not.
AustralianSuper ran second in terms of 10-year returns, with 8.6%, ahead of ART with 8.4%. For 2022/23 AustralianSuper returned 8.2%.
The SuperRatings analysis pointed to the fact that some funds had reviewed and written down unlisted asset valuations “contributing to moderately weaker annual performance”.
According to the SuperRatings analysis, all Balanced funds, those with between 60% to 76% of their portfolio invested in growth assets, are expected to deliver positive returns to members, while the top 10 funds provided members with returns of over 9.5% for the financial year and members in several of the best performers will be receiving double digit returns.
It specifically named ESSSuper as the top performing Balanced fund for the year, returning 13.3%, followed by Vision Super with 11% and Brighter Super with 10.6%.
SuperRatings executive director, Kirby Rappell emphaised the importance of long-term performance.
“While short term trends may be topical, longer term trends are our primary focus as we want to see which funds have performed well over the long term and their alignment with their member’s outcomes,” he said.
“We observed funds reviewing and writing down their unlisted asset valuations at the end of the financial year, contributing to the moderately weaker annual performance of funds with significant exposure to these assets in FY23; however, over the long term, they have added value to member outcomes, with many of the top performing options over 10 years having exposure to alternative assets” Rappell said.
“Superannuation continues to deliver for members over the long term with annual returns of 7.1% since compulsory superannuation began in 1992.”
So some Industry Funds have not correctly valued Unlisted Assets and artificially report higher earnings.
And
The SuperRatings analysis pointed to the fact that some funds had reviewed and written down unlisted asset valuations “contributing to moderately weaker annual performance”.
APRA, HOW IS IT POSSIBLE THAT ALL FUNDS DONT VALUE UNLISTED ASSETS DOWN WHEN THEY HAVE LOST VALUE.
Mike, with the greatest of respect, anyone who describes 60-76% growth funds as “balanced” does not understand the industry. Strictly, a balanced fund is 50/50, though in Australia 60/40 is accepted as a typical balanced fund.. but to describe any fund holding more than 60% in growth assets as “balanced” is simply wrong – hence the names of many of the “winners” in your article.. containing “growth“ in their names ie. ESSSuper Accum – Basic Growth, Vision SS – Balanced Growth, Equip MyFuture – Balanced Growth, Mercer Super Trust – Mercer Select Growth, HESTA – Balanced Growth all of which are growth funds, not balanced funds !
Great example of ASIC / APRA indifference or corruption allowing return falsification at levels not seen since Bernie Madoff last sent his statements out.
Special mention for the ‘great’ work and analysis by ‘SuperRatings’ (total misrepresentation in the name as well), what a joke.
Almost as good as those clowns that pay groups like ‘AdviserRatings and ‘Top 10 Financial Planners’ to list them as good planners as opposed to winning external independent awards or true merit based system of ranking.
Actually, I can think of a few questions to be asked about the dominance of union (aka “industry”) fund returns: